Market Commentary
The market remained negative throughout the week, driven by profit-taking, selling pressures, and concerns about the upcoming IMF review. On the economic front, the headline inflation for Jan’25 dropped to a 101-month low of 2.4% YoY. In addition to this, the trade deficit widened by 18% YoY in Jan’25, arriving at USD 2.3bn. Moreover, the SBP raised PKR 452bn in the T-Bill auction against a target of PKR 450bn. The petroleum sales remained stable at 1.38mn tons in Jan’25 on a YoY basis while reporting 8% MoM growth. The cement dispatches in Jan’25 increased by 14% YoY to 3,895K tons. Meanwhile, the urea and DAP sales in Jan’25 declined by 27% and 6% YoY, respectively. The SBP reserves increased by USD 46mn WoW, reaching USD 11.4bn. The KSE-100 index closed at 110,323pts, shedding 3,933pts | 3.44% WoW.
Sector-wise negative contributions came from i) Oil & Gas Exploration Companies (821pts), ii) Commercial Banks (593pts), iii) Fertilizer (479pts), iv) Technology & Communication (264pts), and v) Oil & Gas Marketing Companies (232pts). Meanwhile, the sectors that contributed positively were i) Insurance (23pts) and ii) REIT (4pts). Scrip-wise negative contributors were MARI (291pts), FFC (241pts), PPL (235pts), HBL (226pts), and EFERT (202pts). Whereas scrip-wise positive contributions came from LUCK (81pts), SAZEW (56pts), NBP (26pts), AICL (26pts), and COLG (19pts).
Foreigner selling continued this week and clocked in at USD 9.88mn compared to a net sell of USD 4.7mn last week. Major selling was witnessed in All Other Sectors (USD 6.9mn) followed by Cement (USD 2.3mn). On the local front, buying was reported by Insurance Companies (USD 9.6mn) and Individuals (USD 8.0mn). Average volumes arrived at 434mn shares (down 12.8% WoW), while the average value traded settled at USD 76.0mn (down 22.9% WoW).
Other major news: i) Kia Lucky Motors launches all-electric EV9-GT Line SUV in Pakistan, ii) FBR demands Rs18bn from tractor maker, iii) Housing sector: PM likely to approve package today, iv) Exports up 10% to $19.55bn in July-Jan 2025, and v) SBP raises Rs651bn through floating rate PIBs.
Outlook and Recommendation
We anticipate the market to turn positive in the coming week. Moreover, with the ongoing result season, certain scrips are expected to be in the limelight amid the expectation of better results.
Our preferred stocks are PSO, OGDC, PPL, FFC, FCCL, MLCF, LUCK, NBP, AKBL, HUMNL, SYS, AIRLINK and HTL. The KSE-100 is currently trading at a PER of 6.0x (2025) compared to its 10-year average of 8.0, offering a dividend yield of ~8.4% compared to its 10-year average of ~6.5%.
Courtesy – AHL Research
